Correlation Between Basic Materials and Oi SA
Can any of the company-specific risk be diversified away by investing in both Basic Materials and Oi SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Basic Materials and Oi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Oi SA, you can compare the effects of market volatilities on Basic Materials and Oi SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Basic Materials with a short position of Oi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Oi SA.
Diversification Opportunities for Basic Materials and Oi SA
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Basic and OIBR3 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and Oi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oi SA and Basic Materials is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Basic Materials are associated (or correlated) with Oi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oi SA has no effect on the direction of Basic Materials i.e., Basic Materials and Oi SA go up and down completely randomly.
Pair Corralation between Basic Materials and Oi SA
Assuming the 90 days trading horizon Basic Materials is expected to generate 0.05 times more return on investment than Oi SA. However, Basic Materials is 22.11 times less risky than Oi SA. It trades about 0.09 of its potential returns per unit of risk. Oi SA is currently generating about -0.13 per unit of risk. If you would invest 558,090 in Basic Materials on August 24, 2024 and sell it today you would earn a total of 10,826 from holding Basic Materials or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Basic Materials vs. Oi SA
Performance |
| Timeline |
Basic Materials and Oi SA Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Oi SA
Pair trading matchups for Oi SA
Pair Trading with Basic Materials and Oi SA
The main advantage of trading using opposite Basic Materials and Oi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, Oi SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Oi SA will offset losses from the drop in Oi SA's long position.| Basic Materials vs. Ross Stores | Basic Materials vs. Autohome | Basic Materials vs. Zoom Video Communications | Basic Materials vs. Metalrgica Riosulense SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |